“SpaceX designs, manufactures and launches advanced rockets and spacecraft. The company was founded in 2002 to revolutionize space technology, with the ultimate goal of enabling people to live on other planets.” 
Until SpaceX, it was taken as fiat that a launch using the only US Launch Service Provider cost $160 million (plus a $1B retainer) and was carried out by United Launch Alliance (ULA), a joint venture between aerospace giants Boeing and Lockheed Martin. SpaceX’s highly effective operating model, branding, and innovation have allowed it to undercut ULA and charge $60 million for a launch on a Falcon9, renewing access to outer space that for so long had been prohibitively expensive.
SpaceX relentlessly pursues low-cost launch and space travel for government and commercial customers in two main ways: low-cost/reusable components and vertical integration.
- The question that is always asked when designing a component is, “can we get something off the shelf that accomplishes the same thing?” Rather than designing a new product specifically for aerospace, SpaceX looks to adjacent industries for items that need only slight modifications or can be purchased off-the-shelf to save on cost. Cost-plus pricing of legacy aerospace de-incentivized this behavior and allowed costs to increase. SpaceX also mandates that components be suitable for multiple flights, minimizing average flight cost.
- Vertical Integration
- Rocket cores are not subcontracted at SpaceX; neither are fairings, engines, composites, or many other components that doomed legacy aerospace through endlessly telescoping margins. When an item cannot be purchased at low cost off-the-shelf, SpaceX designs and manufactures the component in-house, adding capability as needed. This has led to the Merlin Engine–the most efficient engine ever made and the only rocket engine produced in the US.
- SpaceX employs an unconventional recruiting model: hire for potential rather than capability. SpaceX recruits engineers with a passion for innovation, not limited to aerospace. Rather that picking off industry veterans from NASA, Jet Propulsion Labs, or other industry players, SpaceX recruits at racing competitions and university engineering events–looking for passion rather than proven experience in aerospace .
- As clearly written in the mission statement as visualized in the Mars travel posters throughout the office, SpaceX isn’t about launching satellites for the Air Force or payloads for NASA–these are merely means to the ultimate goal of interplanetary colonization. Walking through the SpaceX office will turn even the most apathetic into believers; from the rocket-shaped trash receptacles to the suspended space capsule at the entrance to the factory floor to the Jetson-esque furniture in the conference rooms engineers, prospective customers, and government agencies are clearly not just buying a Falcon9 or a Dragon, but rather enabling a multi-planetary human race.
- SpaceX is unique in that it operates a “test as you fly” innovation model. Rather than build large-scale facilities on earth (giant vacuum chambers, harsh condition rooms), portions of space craft and rockets are outfitted with experimental systems and components that don’t jeopardize the mission. This enables engineers to test new systems in situ, allowing for better and more reliable test conditions, faster feedback on designs, and more efficient capital expenditures on earth.
- Known for long, grueling hours, ask any SpaceX employee and they’ll tell you there’s no place they would rather work. An innovation model that emphasizes personal ownership, engineers don’t work nonstop because someone is telling them to, but rather because they want their component or system to succeed. It’s this distinction that turns the typical command-and-control structure of legacy aerospace on its head and allows for rapid, disruptive innovation.
- Any component made at SpaceX needs to be reusable. In fact, reviews and approvals need to be conducted if the component is only suitable for one flight, establishing reusability as the overarching norm. Additionally, at $60MM per launch, the Falcon9 stands to become cheaper once landing is successful and the first stage becomes recoverable .
Enabling the Business Model Through Operations
SpaceX’s operating model very clearly matches its business model. To pursue low-cost rocketry the company needs to rapidly innovate with new ideas in what had been a stagnant industry. The recruiting model ensures that fresh ideas are brought to the table rather than industry-tolerated ideas while the branding helps retain and inspire both employees and customers, simultaneously creating favorable media for the company. This coverage brings lucrative government contracts within reach as public sentiment shifts in favor of SpaceX. The innovation model is key, however, in ensuring that engineers are able to radically innovate; the test-as-you-fly methodology, substantial personal ownership, and drive to reusability enable rapid iteration through an impassioned workforce focused on a common goal: learning from fast failure to build efficient systems.
Disrupting the launch services industry enables what so many dream of: pushing beyond our terrestrial boundaries, exploring other planets, and bringing internet access to disenfranchised populations through low-cost satellites. Elon Musk’s well-aligned business model ensures that step changes in innovation continue in the aerospace industry in tandem with cost reductions, harnessing the passion and ideas of some of the world’s brightest engineers .
 All other sources are from personal experience.